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Experts In Africa Urge Harder Bargains With China

posted 6 May 2013, 07:16 by Mpelembe   [ updated 6 May 2013, 07:17 ]

Policy makers and executives in Africa worried the flood of cheap Chinese imports is sapping the continents own manufacturing are urging African governments to drive harder bargains with China.

JOHANNESBURGSOUTH AFRICA  (REUTERS) -  For more than a decade African governments have rolled out the red carpet for Chinese investors, trading oil, coal, iron ore and other resources for badly needed ports, roads and railways.

But policymakers and executives, worried the flood of cheap Chinese imports is sapping Africa's own manufacturing potential, say the continent must drive harder bargains with China.

Tendai BitiZimbabwe's Finance minister said time has come, for Africa to jettison the view of Beijing as a benevolent partner, bound by a common resistance to the meddling West.

"The reality as well is that they are not comrades, their companies are there ot make profits like everyone else, and therefore it is important for African leaders... it is important for everyone to have your best lawyers, your best accounts, best advisors when you are negotiating with them," said Biti.

He blamed cheap Chinese textiles for the collapse of local manufacturing industries on the continent and urged for equitable partnerships.

"The African textile industry is basically collapsed because of Chinese imports, in my country for instance all the major textile manufacturers, companies like David WhiteheadModzoniDari textiles have collapsed," he said.

China's trade with Africa has surged from about 10 billion in 2000 to 166 billion US dollars in 2011, with much of that an exchange of African minerals for Chinese manufactured goods.

Diana Layfielf, chief executive officer, Standard Chartered Bank Africa, said Africaneeds to start improving its value added activities to maximise on profits and reduce dependence on finished imported products.

"Many African markets need to think more about value added activities within their own countries, in Nigeria there is a fantastic example, the Nigerians are one of the largest exporters of tomatoes in the world, they export the tomatoes to Italy and they are one of the largest importers of tomatoes paste from Italy. There is no conceivable reason why Nigeria can not do all that value added activity in Nigeria," said Layfield.

Even in South Africa, the continent's largest and most developed economy, manufacturing accounts for just 15 percent of GDP. It is even lower elsewhere, under 11 percent in Kenya and 10 percent in Nigeria.

Part of the fault may lie with African policymakers, for not demanding enough from their Chinese counterparts at the bargaining table.

But Kenyan based economist Alyu Khan Satchu says even though the fault may lie with African policy makers, China needs to be aware of their effect on locally grown businesses.

"I think you know that the Chinese government needs to be aware of what its entrepreneurial class is doing and make sure that they are not taking the food out of the mouths of people who are just struggling to survive and I think that is important. We know Chinese goods are cheapest the world over, they are the exporter to the world and therefore you know there entrepreneurs in a way have an advantage which is very difficult for our sort of's not even SME its below SME, its people at subsistence level, they need to be able to make their own livelihood you cant take that away from them," he said.

Satchu added that Africa must demand that China transfer skills and technology to the continent instead of allowing it to simply export raw materials only.

For some African politicians, part of China's attraction lies in its unwillingness to criticize local governments over human rights or corruption, unlike the West.

Sensitive to the criticism, China has been careful to frame its role in Africa as one that is mutually beneficial.

China has also responded with a charm offensive to ease concerns about its role on the world's poorest continent, including lobbying for South Africa's addition to the group of developing countries now called BRICS.

President Xi Jinping last month visited Africa on his first trip abroad as president.

While Xi outlined his Africa policy as a partnership among equals, China clearly holds the cash: it is offering 20 billion US dollars in loans to the continent between 2013 and 2015.